BlackRock puts sustainability at the center of investment strategy, expects more transparency in sustainability disclosure
Was it the heartbreaking photos of scorched koalas in Australia? Was it the pressure from activists such as As You Sow, which submitted a shareholder proposal asking for a report on how the company plans to implement the new Business Roundtable statement of purpose? (See this PubCo post.) Was it the press reports, like this one in the NYT, highlighting what appeared to be stark inconsistencies between the company’s advocacy positions and its proxy voting record? Was it the protests outside of the company’s offices by climate activists? The letters from Senators? The charges of greenwashing? Whatever the precipitating factor, in this year’s annual letter to CEOs, Laurence Fink, CEO of BlackRock, the world’s largest asset manager, announced a number of initiatives designed to put “sustainability at the center of [BlackRock’s] investment approach.” What’s more, he made clear that companies need to step up their games when it comes to sustainability disclosure.
ISS recently released the results of its 2019 Global Policy Survey. In this year’s integrated survey, the topics included board gender diversity, overboarding, sunsetting of multi-class capital structures, combined chair and CEO roles and climate change risk. The respondents included 128 investors (including 88 asset managers, 24 asset owners, four advisors and 12 other investors), and 268 non-investors (including 227 corporate issuers, 19 advisors, six corporate directors and 16 other non-investors). Highlights of the survey are summarized below.
Non-profit CDP (fka the Carbon Disclosure Project) has released its analysis of the responses to its climate change questionnaire for 2018 from two groups of companies—a large group of almost 7,000 respondents and, analyzed separately, a group of 366 respondents that were among the world’s 500 largest companies (by market cap). The analysis focused on the risks and opportunities presented by climate change and, for the first time, the analysis considered companies’ expectations regarding the potential financial impact of climate risk. In the aggregate, the amount reported was eye-popping, if not exactly surprising, and, given that many companies did not respond at all, is undoubtedly an underestimate. Notably, however, the aggregate amount companies attributed to potential climate-related opportunities was even “bigger than the risks.” The significance of the potential financial implications, together with the imminence of these risks, suggest that companies may need to think hard about climate risks and the associated financial implications in crafting their public disclosures.
As noted in the proxyseason blog from thecorporatecounsel.net, asset manager State Street Global Advisors has recently published an updated Climate Change Risk Oversight Framework For Directors. Climate change is identified as a continuing priority for SSGA’s asset stewardship and company engagement program. In the commentary introducing the framework, SSGA advises that boards should look at climate change “as they would any other significant risk to the business and ensure that a company’s assets and its long-term business strategy are resilient to the impacts of climate change.” A similar view was expressed by the NACD in Board Oversight of ESG, which advises that “climate-related risks must be integrated into the company’s ongoing risk assessment and quantification processes and the board’s oversight of risk management.”
by Cydney Posner Asset management firm BlackRock (reportedly the largest, with $5.1 trillion under management) has identified its “Investment Stewardship” priorities for 2017-2018, intended to help companies prepare for engaging with BlackRock. Among the hot topics are governance (including board composition and diversity), corporate strategy for long-term value creation in […]